Deciding to sell your rental property is a big step in your real estate investing journey.
There are several reasons why you might decide to sell. Maybe you’re looking to liquidate your assets and invest elsewhere. Or maybe you’re simply capitalizing on appreciation and want to collect your return on investment.
Regardless of the reason, whenever you sell a rental property, you must set aside time to prepare.
Selling a rental property requires specific types of preparation, just like preparing a house to sell. Like selling your personal residence, you’ll need to complete repairs, hire a real estate agent, and show your property. However, with rental real estate, there is the added challenge of communicating with your current tenants, if you have occupied units.
Read on to learn about how to prepare your rental property for a sale.
Deciding When to Sell
The first step in the sales process is choosing when to sell.
This decision should be based on a variety of factors, including the demand for housing in your area, appreciation, and interest rate trends.
If buyers are flocking to your city, you will likely see high competition for a property in good condition. Likewise, if job prospects, population trends, or new laws encourage migration to your area, it’s likely that the demand for housing will increase as well.
Another good time to sell is when you’ve built a high equity level in your property. If your gain will be minimal, there’s no incentive to sell your property and lose the cash flow from rent payments.
Lastly, a good time to sell might be if your lender has instated higher than average interest rates on your mortgage such that paying it becomes unsustainable. If refinancing isn’t on the table, it might be a sign to sell.
Communicating with Tenants
Before you can sell your property, you must communicate with your tenants. There is no reason not to be transparent with your current residents, and in fact, failing to do so will cause more trouble. Your tenants are less likely to cooperate if they feel they’ve been blindsided by the sale.
If you’re planning to sell your property, let your tenants know as soon as you start the process. For example, if you reside in Miami, ensure to spend considerable time to make your tenants let know about the property. Make your property’s visibility more vital on their best property search miami website where they can find yours easily and make the deal. Your tenants will be inconvenienced during the sale, whether that be by frequent showings, repairs, having to move, or having to renegotiate their leases with a new buyer. If you plan on transferring your tenancies, you need your tenants’ trust and cooperation.
While small landlords might find in-person visits more manageable, larger landlords can and should use property management tech to make communicating details of the sale as quickly as efficiently as possible. For instance, you can send messages via chat or email for notifications.
Repairing Your Property
Unless your units have been vacant for a while, you’ll also likely need to make some repairs to your property before showing it to potential buyers.
The first order of business is to evaluate your property’s condition. Perform a pre-listing inspection to identify problems and repairs that will need fixing before your property goes on the market. Maybe you give your units a fresh coat of paint, deep-clean all the appliances, replace the window screens, or service the HVAC system.
Advertising and Showing
When your properties are ready to show, it’s time to list them online.
This is the best time to hire a real estate showing agent, who will help you find the perfect buyer for your property. Agents know all there is to know about advertising and showing a property, including house showing etiquette and insider information about the local market.
Real estate agents also have access to the Multiple Listing Service (MLS), which is a resource you’ll want on your side as you navigate the market. The expertise of a real estate agent is usually well worth the cost of their commission.
Selling a property can be a complex and involved process. Beyond these steps listed here, there are many more in the sales process itself: transferring your tenancies, transferring the deed, and paying recapture tax on the sale. However, by taking preparation seriously up front, you can substantially decrease the stress of the sale and quickly move on to your next endeavor.
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